The “Chip” Shortage

For some reason, semiconductor products have become known as "chips," even though 99% of them are assembled into various enclosures of very tough protective polymers, and then tested for proper operation and compliance to the specifications. The "chips" themselves are actually thin pieces of silicon onto which numerous patterns, numerous additional "layers" of oxide and metallization, and other substances have been added. Back when I was starting in the business in 1964, most "chips" had at most 64,000 individual transistors, and by the time I retired in the early 2000's, the largest were over sixteen million! Wow! Now, the density goes well into the billions. The individual size of tiny transistors on such a huge array on a single chip is so small that very powerful microscopes are required to "see" them. To make matters more complex, now they are "multi-storied" and even more complex, totally hard to fathom. Oh well, enough of "chips;" now we realize that modern life would not exist without them.

For some reason, important only to me, and perhaps an indication of OCD or some other malady, I've been noting, reading, and finally tearing out of the two newspapers that I take, articles that pertain to "chips." Considering that in the olden days, no one even knew what a "semiconductor" was, these days you can hardly pick up a newspaper without some article describing the shortage of these critters. Headlines include "Intel: Protracted Chip Draught," "China's Strategic Emphasis on Semiconductors," to "Chip Crunch Threatens Car Makers' Profitability." The last one spawned several additional articles such as "Ford to Idle Plants as Chip Shortage Slows Output."

As an example of my OCD-ness, here is a (probably incomplete) list of the number of major newspaper articles in the Austin paper and the Wall Street Journal over the last year or so on this matter:

January 4

February 2

March 1

April 8 (Wow, a biggie)

May 4

June 5

July 8

August 7

September 1

October 1

November 8

In general, the subject now certainly is visible. It's interesting that the oblique (to most) industry I joined in late 1964, which no one really talked about, now is so high-profile ... and not in a positive way.

So why can't these "chip people" just turn the crank and solve the problem right away? As you might expect, the answer is complicated. For one, the basic process of creating a little "chip critter" is very difficult ... and expensive. As an over-simplified explanation, there are several different "processes" required.

  1. The Design. Powerful computer programs are used to design the "chips," including the logic itself ... what you want the signals to do and in what order. This is called "logic design" and can be extremely complex. One must know what one wants to happen. Applications engineers who understand the desired output need to feed this information to the "logic" gurus who transform the desired result to the logic that makes it happen. The logic then becomes translated to actual transistors and capacitors and such that can be implemented in semiconductor form on a silicon (and similar material variations) chip.
  2. The Process: the word "process" used here refers to the many semiconductor fabrication process steps needed to create the zillions of individual components, working together, that direct all the different signals to run at very high speeds, using amazingly low power, through and around the circuit in order to produce the desired output. The fabrication process comprised thirty or forty steps during my early career, and many, many more now. Individual steps use extremely sophisticated equipment that grows oxide layers, "diffuses" or drives certain controlled substances into the silicon, both at very high temperatures (over 1,000 degrees Centigrade) as well as "implanting" these into the silicon surface at very high energy levels (literally bombarding the surface), and cuts tiny detailed patterns into both the surface of silicon, oxide, and metal patterns. Oh yes, there are various layers of metal and other conductive substances created by depositing them onto the surface or making previous layers of things conductive by diffusing or implanting controlled impurities into them. OK, probably TMI.
  3. The silicon "substrate:" The starting silicon substrate is a completely stand-alone industry. Back in the very olden days, the semiconductor companies made their own by "pulling" silicon and germanium "ingots" from high-temperature solutions, but economy of scale and other factors soon created a tier of "silicon" suppliers that pull these ultra clean "icicle" or "carrot" shaped hunks of silicon out of molten compounds. These silicon ingots are sliced into thin individual units called wafers, which are used as starting material for the "wafer fabrication" process.
  4. The equipment that does all the stuff in Number 2 above is an entirely stand-alone industry, or several industries. Back in the olden days, many semiconductor companies actually made their own equipment to do all these processing steps, but quickly a stand-along industry developed to specialize in this gear. I remember when Motorola, Texas Industries, and Intel actually pulled their own silicon ingots and made diffusion furnaces and oxide growth furnaces as well as the photo-patterning and etching units as well as other processing equipment. Those days are long gone.
  5. Wafer Probe Testing: There are several forms of "testing" including in-process testing as the silicon moves along the processing steps. Once the silicon wafer completes its torturous journey, each wafer is tested (probed) with tiny probe needles that actually contact electrically the metal contact points on the pattern for each individual pattern. There can be from hundreds to thousands of individual integrated circuits (future chips) on each wafer.
  6. Assembly: The individual "chips" are separated from their "wafer" universe by cutting (called scribing) each one from its solid wafer. The units that tested good at "wafer probe" are lifted off and "soldered" onto the base portion of a package. The chips that tested bad are inked or otherwise identified and are discarded. Each "contact pad" is connected with a precise bonding or connection step to one of the tiny metal strips that will be its "road" out of the insulation of the final package. The final steps include some form of protective epoxy or other compound that will protect the "chip innards" from the environment in the final use application.
  7. Final Testing: Pretty self-explanatory. Complex testing computers put the assembled "chip," now probably better described as a completed integrated circuit, through the testing to guarantee it meets its electrical specifications

In the "old days," as mentioned above, many semiconductor companies did every step above, from growing the silicon ingots, making much of the equipment that did the processing steps, and even the assembly and testing gear. Inexorably however, as the industry grew in size, specialized firms were created to do these steps and the "real men" of the industry more and more purchased the "wafer fabrication" (or wafer-fab) equipment and other "clean room" environmental equipment They developed the processing steps themselves and ran the wafers in their own "clean rooms" or "Fabs." These "real men" soon learned that buying all the supporting equipment and then building a fantastically controlled "clean room" in which to run the wafers was breaking their capital budget, and specialized companies began to spring up specializing in super-efficient clean rooms that would take your design and your specialized circuit design and layout and run it to a standardized process flow. They could run it better than you could because they did only "that" and you could not afford the capital expense anyway. So "you" were content to "design" the chips. The "real men" gradually vanished, at least in the mainstreams of the business, and now only Intel, as one of the original designing and manufacturing companies, does the bulk of their own "wafer fabrication." Most of the others in mainstream markets, with large volumes in standardized processes, use these clean-room specialists, or "foundries."

Because the capital requirements to compete in the wafer fabrication foundry business is so high, only two dominant firms have evolved: Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. Samsung does contract manufacturing for others as well as running their own designs. TSMC on the other hand, is a pure-play foundry. One can wonder if part of the strategy of TSMC was to provide a virtually priceless service to the industry as a guarantee they will not be taken over by China, which claims the island as a renegade province. Samsung is South Korean. Both TSMC and Samsung have announced plans to add capacity in the USA as well as their base areas of operation. Intel, which is American, has fallen a bit behind and a new CEO has announced the company will both catch up in terms of world-class "Fab" capability, and also enter the "foundry" business and run designs of other firms. We shall see. At any rate, these three are the only companies now actively providing wafer foundry services.

To consider a dystopian concept, these world-class clean room operations are completely known and visible, in terms of where they are and what they can do. Literally, a few strategically placed weapons fired from launching areas on Earth, or from space would and could destroy them and thus much of the economy of the modern world. That unthinkable development would set the world's economy back a decade. It's hard to imagine that any power would take that move, but the possibility exists of some sort of Dr. Evil sort of plot and threat.


Comments are welcome and will be published, pro and con. Make your observations below or send them to me via email at Email commenters will not be identified unless requested.

Enjoy life; it's the only one we will get.

J.K. (Jim) George


* Check out my books and blogs on my author website:

Please recommend them to your friends. Also, recall that I’ll travel to any book club or radio club within two hours of Austin to discuss either of the books and answer any questions. Any and all comments are welcome either by email to my return address,, or to the website in the comments section after any blog.

* Reunion is available in stock at Tamarack on the West Virginia Turnpike as well as at and other Internet retail locations. It’s under consideration for a movie, and a screenplay now is under active development!

*Contact Sport is in stock in hardcover print format at any of the thirteen HRO (Ham Radio Outlet) stores nationwide as well as at DX-Engineering and the American Radio Relay League. In addition, many Barnes and Noble stores nationwide carry it in stock, and they, as well as Book People in Austin or any independent bookstore can order it. You can buy direct at my website’s link for a personalized copy.

*Both books now are available in Print, eBook, and Audio Book formats at all major Internet retailers or from my web site as a personally autographed copy in any print form.

11 Responses

  1. JK James George
    From Anon-1: I just read your blog on “chips” and was impressed (as always) by your ability to take a tough subject and explain it to people like me to make in interesting and informative. Good job.
  2. JK James George
    From Anon-2: Wow! You do know your”Chips!” You explained it so well even I felt like I knew what you were talking about. Just no test please;) I can understand why they are so Valuable and why you’re concerned some “evil” person or country might be tempted to do something? Perish the thought!
  3. JK James George
    From Anon-3: My cousin who worked for Motorola for years. More information to feed our anxieties about the future.
  4. JK James George
    From Anon-4: I greatly enjoyed your succinct summary of the “chip” industry and how it has evolved before, during and after my career at Motorola Semiconductor Products Sector in Austin (1981-2004). I remember looking through a window of a ceramic crucible in the Phoenix area where Motorola pulled silicon ingots out of the molten raw materials. Then I was able to see those ingots sliced by piano wire coated with a diamond slurry. In Austin, I worked in the final test and assembly departments where those chips were packaged, tested and marked with identifiers. Late in my career, I worked at Metrowerks (part of Motorola/Freescale) where the software was developed to enable customers to program our micro-controllers to work in their products and applications. I feel very fortunate that I could see most of the various steps while working at a company that was able to do it all. Since you mentioned Samsung as one of the big three fab companies in your blog, I’m wondering what the contribution of the Texas grid failure was on the current “chip" shortage. I found a few articles about the shutdown, but I don’t think the full impact or cost has been included. Fabs can’t easily be shut down and then come back on-line at full capacity. Equipment can be damaged by the sudden changes. Getting replacement parts and material has been problematic due to supply chain issues. The failure of the Texas power grid and the lack of preparation to prevent a repeat loom even larger in the future since Samsung plans to build another facility in Texas that is 2 times bigger than the existing one. It seems to me that extreme weather and short-sighted planning can do almost as much damage as a potential targeted attack. Thanks again for a thought-provoking blog.
  5. JK James George
    From Anon-5: Very intéressant, Jim, as usually! Let me say my admiration for your activity...
  6. JK James George
    From Anon-6: Hi Jim Hope you are doing well. This brought back a lot of great memories---thanks!! Think of what happens if China invades Taiwan---we better accelerate our chip manufacturing capacity fast.
  7. JK James George
    From Anon-7: Nice blog post reviewing the “chip” making process. A few thoughts I had while reading: Interesting that you didn’t attribute the “real men have fabs” line. (Jim's note here. I should have attributed that famous line to Jerry Sanders, the CEO of AMD and a high-profile industry figure) Jerry was clearly very proud of that - and AMD maintained their own fabs until well after his retirement. And speaking of Jerry, I think I would include Global Foundries on the list of major chip manufacturers today. This is where the “real man’s” fabs ended up. My son is working as a chemical engineer/project manager building the latest Intel fab in Chandler, AZ right now. Intel is definitely full steam ahead in maintaining their own “manliness” - ha! I worked in MOS11 at Motorola at the beginning of my career (just one 3-month rotation programming the automated wafer moving tram system). I believe that fab is still in operation as part of NXP? Don’t even want to think about your last concept of an attack on our global semi manufacturing plants. Would take an evil that was bent on harming the entire world. Thanks for the trip down memory lane!
  8. JK James George
    From Anon-8: Hah, Jim, you just couldn't stay away from "chips", could you? Nice summary of the semi supply chain. Of course, in addition to all of the steps in the supply chain, there is also that wonderful "qualification" time required... especially for the automotive companies. Today's cycle times are months instead of days or weeks and when a fab goes "cold" due to a shutdown it takes months to get re-qualified. Then, if new equipment or new processes or designs are introduced it takes half a year to a year+. Not to mention that nobody makes "old equipment" anymore, which many auto companies still rely upon. Also, a lot of "capacity" is lost while ramping the yields back up. Finally, some Southeast Asian countries got hit with Covid much later in the pandemic and their workforce was reduced for extended periods, compounding the "chip capacity" problem. The good news for our semi buddies is that short supply = high prices. Their biggest supply chain problem is where to warehouse all the cash they are making!
  9. JK James George
    From Anon-9: VERY good blog. A bit over my pay grade but nonetheless very interesting and extremely well written!
  10. JK James George
    From Anon-10: Interesting but very difficult to read, even with reading glasses, because your font size is so small. A little larger next time, sir.
  11. JK James George
    From Anon-11: Really informative, Jim. Thanks!

Leave a comment